Silicone products supplier Topco Technologies Corp (崇越電) yesterday provided a positive business outlook for this quarter and next quarter, despite revenue falling last quarter.
Revenue last quarter fell 16.6 percent to NT$1.74 billion (US$56.4 million), compared with NT$2.08 billion a year earlier, due to clients’ inventory adjustments that started in the fourth quarter of last year, Topco said.
Another reason for the decline was the US-China trade dispute, which has since late last year affected Topco’s clients in China and forced some of them into relocating to Southeast Asia, chief executive officer Chang Sheng-ho (張勝和) told a conference in Taipei.
“However, new demand from our major client, Shin-Etsu Chemical Co, and an end to inventory adjustments are expected to stimulate demand in the second quarter,” Chang said.
A plan by Shin-Etsu Chemical to invest more than ¥110 billion (US$982.1 million) over the next two to three years is a boon to Topco’s sales, Chang added.
Topco’s silicone products are used in various applications ranging from food containers and apparel to construction and building materials.
Consumer electronics last year made up the bulk of the company’s revenue at 24.9 percent, followed by cosmetics at 6.5 percent, medical products at 4.8 percent and vehicle components at 3.8 percent, company data showed.
Topco has seven operation bases in China, two in Vietnam and one in Indonesia.
Last month, the company expanded its factories in Hanoi to provide silicone to companies affected by the trade spat, Chang said.
As China adopts stricter pollution controls following chemical plant explosions in Jiangsu and Zhejiang provinces in the past few months, more companies are expected to use silicone products, which are less toxic, more eco-friendly and perform better in extreme conditions, which would help drive revenue growth in the near term, Topco added.
The growing popularity of smart watches is expected to contribute to the company’s performance this year, Chang said.
The increased use of silicone in the packaging of LED products would also bode well for the company’s outlook, Topco chairman More Pan (潘振成) said.
About 70 percent of Topco’s products are made for foreign companies, with the remainder destined for Taiwanese firms.
Topco’s other major Japanese clients include Fujikasei Co and Konishi Co.
The company also counts China-based Wynca Co (新安化工) and Hoshine Silicon Co (合盛矽業) as well as Dow Corning Corp’s Dowsil brand, Momentive Co, Wacker Chemie AG and Elkem ASA among its customers.
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